from the wrong dept

Not long ago, I wrote a post about the aftermath of the Oregon mass shooting and how every media outlet would retreat to familiar stances looking to blame all manner of things on idealogical grounds. That, of course, happened. Left out of that post is how grandstanding politicians would do the same: shifting attention toward familiar punching bags while diverting attention from other targets in their own interests. One of the first to do so, as it turns out, is Bobby Jindal, who certainly doesn't get any points for originality in trotting out the violent media scapegoat to sate some of the public's need to place blame for the shooting.

First on his hitlist was Hollywood.

We glorify sick and senseless acts of violence in virtually every element of our pop culture, and we have been doing that for at least a generation. Our movies and TV shows feature a continuous stream of grotesque killing of every kind imaginable. And this is true of virtually every genre, from horror to drama to comedy. We celebrate and document every kind of deviant behavior and we give out awards to producers who can push the envelope as far as possible. Rape, torture, murder, mass murder, all are cinematic achievements.

This, obviously, is overstating things by several orders of magnitude. First, it's noteworthy that Jindal's suggestion that violent movies, ever ramping up, cause violence within the real world fly in the face of simple statistical analysis. The national murder rate, for instance, is roughly 60% of what it was in the 1970s. Does anyone want to argue that movies have become less violent since the 70s? I didn't think so. But, assuming that Jindal is solely talking about the mass shooting phenomenon, the data doesn't get any better for Jindal. An otherwise dumb opinion piece at National Review at least helpfully included the fact that, when taking the long view and looking at mass shooting incidents over the past century, they are no more common today than in the past. In fact, the high water mark for mass killings looks to have been achieved in the 1920s. Again, anyone want to argue that media in the 20s was more violent than it is today? I didn't think so.

I shouldn't have to say this, but none of this is to suggest that America doesn't have a very real violence and mass killing problem. We do. But it simply doesn't correlate to violence in movies. Nor in video games, which were Jindal's second target.

We have generations of young boys who were raised on video games where they compete with other young boys around the country and the world to see who can kill the most humans. We make it so fun, so realistic, so sensational.

Oh, we make sure that we stop them from bullying at school, but we are completely fine with them watching people get murdered and raped on the internet after school, and we are willing to let them go to the basement and join a fantasy world where they pretend they are killing people for 2 hours after school.

Quick show of hands: who is totally chill with their children watching people get murdered and raped on the internet after school every day? Actually, what the hell is Jindal talking about here? I'm fairly connected in the world of internet-ing, and I'm also a father, and I have no idea what Jindal is referring to. Where is this place where kids go to sit and watch people get raped and tortured? Is he referring to video games here, as he does in his culminating line, where kids are sitting down and super-murdering digital humans for 2 hours every day? Because does that really happen, either? Keep in mind, for all the hand-wringing over violent video games, the average age of the average gamer is going up and currently stands at something like "probably balding or in mid-management by now." For youths that find themselves playing games meant for adults, that's strictly a parenting issue, not a culture issue (for all the reasons described for violent movies above). And, regardless, there's nothing even remotely close to a scientific consensus that violent video games have any negative effect on children at all. In fact, many studies indicate there is no link between gaming and violence at all.

So what is this? Well, it's a politician employing the aftermath of tragedy to gain support, headlines, and attention so as to better compete with a god damned reality show host in a presidential election cycle. And if that doesn't make you sick, no amount of violence in movies or games will either.

from the painful-evolution dept

As broadcaster licensing squeezes Netflix ever tighter, you've probably noticed that the streaming company continues to lose higher-end, popular television and film content at an annoying rate. The latest such shift occurred when Netflix last week refused to extend its licensing agreement with Epix, resulting in Netflix customers losing access to mainstream films like Hunger Games: Catching Fire, World War Z and The Wolf of Wall Street. Epix then proceeded to strike a deal with both Hulu and Amazon, who'll now be carrying those titles instead.

Such deals are at the heart of Netflix's permission culture dilemma, where the company is at the whims of broadcast licensing, often tied to a cable industry (Comcast/NBC) that intends to directly harm Netflix. These copyright gardens, built under the illusion of control, increasingly fracture content availability, confusing customers as they try to find a service that has most of the content they're looking for. Unfortunately, in many instances these customers then wind up finding that piracy is easier than decoding and running this availability gauntlet, where shows appear and disappear daily as deals are struck or cancelled.

And while Netflix's catalog of mainstream, high-end fare may be looking relatively skimpy these days, the company penned a blog post informing customers they really shouldn't worry their pretty little heads about that. Why? Because Netflix is busy working on creating an additional array of original content that may or may not be any good:

"We hear from our members that you wish we had newer movies. So do we. Studio licensing practices means it often takes more than a year before consumers can watch a theatrically released movie when and how they want. Just like we’ve changed the game for TV watchers by releasing entire seasons around the world at the same time, we have begun making movies that will premiere on Netflix globally and in some cases, simultaneously in theaters. It will take us time to build a robust slate of original movies, but we’re hard at work on it with such great stars and directors as Brad Pitt, Ricky Gervais, Judd Apatow, Angelina Jolie, Sofia Coppola and Adam Sandler."

And yes, while some Netflix content (House of Cards, Bloodlines and hopefully soon one of my favorites, Black Mirror) is great, it's not entirely clear that more Adam Sandler movies are the answer for users frustrated at the growing lack of popular options in Netflix's B-grade heavy content catalog. And while licensing does certainly hamstring Netflix, in this instance both Hulu and Amazon didn't find Epix's asking price too severe, meaning that Netflix made a judgement call and decided this content was content that its customers can live without.

At the moment, Netflix is focused on international expansion (200 countries by year's end), disrupting stale movie release windows, and original content. That's respectable, and it's likely the right path toward independence long-term from the noose of tightening broadcaster copyright. But at the same time Netflix's core catalog and satisfied customer base still relies on a certain threshold of quality content. As such, Netflix has to walk a fine line between giving consumers what they want, and trying to navigate the permissions culture tightrope dictated by broadcasters.

Netflix also has to walk the minefield of explaining all of this to consumers who just want the latest and greatest content and options and don't care about the details. For example, Amazon recently announced it would be letting users download content for streaming at a later date (albeit via Amazon's heavily DRM'd system). That's an appealing solution for usage-capped customers, but Netflix last week stated it wouldn't be following suit, claiming that offline downloads would prove too confusing for customers:

"I think it’s something that lots of people ask for. We’ll see if it’s something lots of people will use. Undoubtedly it adds considerable complexity to your life with Amazon Prime – you have to remember that you want to download this thing. It’s not going to be instant, you have to have the right storage on your device, you have to manage it, and I’m just not sure people are actually that compelled to do that, and that it’s worth providing that level of complexity.”

Of course that's crap: letting people store a local copy of a film isn't remotely complex. What's complex is explaining to consumers why such functionality would likely cost Netflix significantly more in copyright licensing fees and layers of mandated DRM deployment. As we've noted previously, Netflix is still transitioning from a DVD rental business governed by the first sale doctrine, to a streaming business governed by the permission winds of countless fickle media empires. Communicating the costs of that transition to consumers clearly and honestly certainly isn't easy, but much like its Qwickster snafu of a few years back, it's entirely possible that Netflix could be pushing too far, too fast.

from the not-how-it-works dept

Late last week, singer Aretha Franklin succeeded in convincing a judge in Colorado to stop the Telluride Film Festival from screening the documentary Amazing Grace -- a concert film shot by Sydney Pollack that was actually filmed back in 1972, but was never shown. Franklin, of course, has no copyright in the film, but argued in her injunction request that she had an agreement with Pollack not to use the film without her authorization. From the complaint:

Ms. Franklin
has never given permission for the use of this footage in any commercial context and has not
authorized the public release of the footage. The footage was taken with the express
understanding that it would not be used commercially without agreement and consent by Ms.
Franklin.

Franklin argued that part of the agreement between Warner Bros., which held the rights to the film, and Alan Elliott, who apparently purchased those rights from WB, was that Elliott would then obtain all the necessary "authorizations, consents and releases and pay all re-use fees and other compensation required by applicable collective bargaining or individual contracts or otherwise required by law." While parts of the complaint hint at possible copyright claims, there really is none here, which is why the actual counts in the complaint do not mention copyright. Instead, they lean heavily on the (already troublesome) concept of publicity rights, as well as an anti-bootlegging law, which makes little sense, since the video is far from a bootleg.

As noted above, amazingly, the judge, John Kane, very quickly obliged and issued a short injunction barring the showing of the film. There is basically no discussion of the issues at all. Rather, Judge Kane merely repeats verbatim the arguments made by Franklin and then orders the injunction, blocking the showing of the movie.

This is ridiculous. As Eriq Gardner at the Hollywood Reporter lays out in great detail, it is difficult to see how this is possible under the First Amendment. When we're talking about speech -- even defamatory speech -- courts cannot issue injunctions, because that's prior restraint. There may be other remedies, but it seems dangerous to argue that a publicity rights claim can lead to an entire film being blocked:

In Colorado, a plaintiff can't prevail on a publicity rights claim if a defendant's use of the plaintiff's name and likeness is privileged under the First Amendment. That much is clear by prior cases. The state's Supreme Court has held the analysis turns on two issues — whether the use is primarily commercial or noncommercial and whether such use reasonably relates to a publication concerning a matter that is newsworthy or of legitimate public concern. Feature films are almost always deemed noncommercial (as opposed to, say, an advertisement) while the public concern of Amazing Grace is a toss-up.

Even if Franklin wins this analysis and shows she has a likelihood of prevailing in her lawsuit, under the proper standard of law, she then needs to demonstrate "irreparable harm" to obtain an injunction. In past court cases, judges have refused to enjoin works even when defamation can be shown or even when someone's privacy rights are being violated. Publicity rights should theoretically evoke an even higher bar because what's being protected is commercial use of their identity.

Even worse, the judge relies on that agreement between Warner Bros. and Elliott concerning Elliott's requirement to get permission. But the actual lawsuit here is against neither WB nor Elliott... but against the Telluride Film Festival, which is not a party to that agreement and thus should not be bound by it. So, even if one were to argue that Elliott had somehow waived his First Amendment rights in signing that contract, that says nothing at all about Telluride's.

The expansive reading of the situation by the judge is really dangerous. As Gardner points out, such a reading of publicity rights laws could allow celebrities to block reporters from writing about them by claiming it is violation of their rights. Furthermore, considering the First Amendment questions at play here, it is even more troubling that Judge Kane doesn't even mention the First Amendment at all, nor does he explore the issue of prior restraint. Even more bizarre? Despite the lack of any copyright claim, the judge seems to focus on the lack of "fair use" for why he's shutting the film down:

A film that essentially recreates the entire concert experience is not fair use of this footage.

Again, the complaint doesn't even make a copyright claim, so it makes no sense to do a fair use analysis in the first place, and even if there was such a claim, a fair use analysis requires a lot more than just saying "hey, it's not fair use." You have to at least do a four factors analysis. But, again, that's neither here nor there since there was no copyright claim in the first place.

And, unfortunately, since the Telluride Film Festival is now over, it's not clear if the festival will appeal this ruling, which will keep it busy in court for no clear benefit. But, in the meantime, the ruling has scared off multiple other festivals that had planned to show the film. As Gardner points out, all of this prior restraint was because Judge Kane couldn't even be bothered to realize who the defendant was, nor did he appear to recognize a blatant case of prior restraint when it landed on his desk:

Judge Kane has done a disservice by issuing a hasty ruling on a last-minute injunction bid — telling THR that this one was an easy call because producer Alan Elliott needed Franklin's permission. Except that's not what he was being asked to adjudicate! Elliot wasn't the defendant after all. Instead, film festivals (and distributors and news organizations) now have to worry about prior restraints on use of a celebrity's likeness and name. And sorry, Aretha, but this is hardly good news for artists who often use the names and likenesses of other artists in their creative endeavors. If she had made a deal that gave her the copyright on the footage — meaning the ability to control reproduction and distribution — that would be one thing; Here, she's attempting the ride the same vehicle that Lindsay Lohanattempted to use to stop a Pitbull song.

I agree with Gardner that this is a horrible ruling, from a judge who seemed to be in a rush to agree with Franklin, without even realizing what the issues were or who the parties were in court (and if they were subject to the contract). The only "saving grace" is that this ruling is at the district court level, rather than appeals court where it would become the rule for the circuit -- but it's already leading to prior restraint and scaring off film festivals from showing the film. And, you can bet that this case will be cited by others looking to use publicity rights to censor content in violation of the First Amendment.

from the more-hassle,-same-safety dept

Following two recent deadly incidents at movie theatres in the US, the Regal Entertainment Group – the nation’s largest movie theater chain – this week added a bag and purse check policy as a security measure in some of the 569 theaters it operates.

“Security issues have become a daily part of our lives in America. Regal Entertainment Group wants our customers and staff to feel comfortable and safe when visiting or working in our theatres,” the chain said in a statement.

This may sound like a harmless bit of "doing something" in response to a few tragic incidents, but there's nothing really harmless about it.

First off, it subjects everyone to the same level of scrutiny -- provided they're carrying a bag of some sort. If you have a purse or backpack or (god forbid) a fanny pack, you're a potential threat. Everyone else? Free to go. Weapons tucked into waistbands or shoved into pockets will go undetected.

And, like the TSA its emulating, the security measures will be easily thwarted and ultimately useless. For every weapon the TSA brags about seizing, many more end up on planes. A recent audit of the TSA's security efforts found it missed 95% of smuggled weapons and explosives. Anyone thinking Regal's security force is going to be better trained and more thorough than the TSA is kidding themselves.

Like the TSA's efforts, this will give moviegoers the illusion of safety, rather than actual safety. An illusion might be comforting enough for most moviegoers and it's all Regal can actually offer. This move is more about PR than reality.

According to a new survey conducted by consumer research film C4, following the Nashville incident, 48% of moviegoers are willing to pay $1 or more per ticket for the additional measures. Nineteen per cent of respondents said they would pay $3 or more.

And I'm sure Regal will be more than happy to take $1-3 more from every moviegoer in exchange for a hassling a few moviegoers. But Regal's move -- while good-intentioned -- is ill-advised. Offering your customers mostly-theoretical protection places responsibility for any future shootings almost solely on each individual theater. Now, if anyone shoots up a theater, Regal will very likely be successfully targeted in wrongful death suits. After all, it instituted additional measures to prevent further shootings... and then failed to prevent a shooting from happening. The additional measures seem unlikely to dissuade anyone but the most easily-deterred shooters from following through with their plans. In exchange for little more than a temporary bump in goodwill, Regal is assuming a great deal of liability.

And given what we know about the most recent theater shootings, a bag check wouldn't have stopped anything. James Holmes, who killed 12 and wounded 70 in Aurora, CO, stashed his weapons in his vehicle. The shooter in Louisiana may have had a backpack (reports are inconclusive), but it wasn't on or near him when police got to him, and a controlled detonation later proved there was nothing harmful inside it. The shooter at the Antioch, TN theater was carrying two backpacks -- one of which was strapped across his chest. When police engaged him, he was also wearing a surgical mask. Most of what was in his bags weren't actually weapons, though. Pepper spray, a hatchet and an Airsoft gun were used in the theater attack. Only one of these is an actual weapon, and Regal's new policy doesn't make it clear what will happen to those who bring in legal items that aren't weapons but the theater decides could be deployed as one.

This focus on bags also makes it clear to potential attackers that security will be looking out for one thing -- backpacks and bags. Avoiding scrutiny simply means not doing that one thing. So, while some moviegoers will be comforted by this security charade being performed on their behalf, many more will be irritated that attending a movie will be nearly as annoying as boarding a plane.

Thanks to the overperformance of N.W.A biopic “Straight Outta Compton,” Universal Pictures is tracking to cross the $2 billion mark at the domestic box office on Saturday, setting a new speed record in doing so.

Universal’s historic climb will break Warner Bros.’ previous record of reaching $2 billion by December 25, 2009. The studio is also extremely likely to break the record for all-time domestic box office high, which was set by WB in 2009 with $2.1 billion.

That does not sound like an industry that is having a problem getting people into the theaters, even if the movies are available via infringement. But, people will argue, these services are actually harming the "home video" revenue stream. But that's questionable as well. First off, it was Hollywood that angrily fought against ever allowing a home video market in the first place (remember that?). And, more to the point, we've seen over and over again that when the industry actually adapts and offers content in a reasonable format at a reasonable fee, people will pay at home, just like they do in theaters.

But, of course, due to continued Hollywood confusion and jealousy, it's still holding back lots of movies from Netflix streaming -- one successful service that has shown that it's totally possible to "compete" with infringing content.

So, again, it's confusing as to what Hollywood's real complaint is. It's shown that if it makes good films, people will go out to the theaters to see them, rather than just watch them online. And if it offers them in a reasonable manner for a reasonable price online, people will pay for that as well. And yet, it doesn't do a very good job of this and then blames the internet for its own failures to adapt. Seems like a weird strategy. If I were an investor in those companies, I'd wonder why they've spent the better part of two decades so focused on "stopping piracy" rather than doing a better job delivering what the public wants.

from the shooting-themselves-in-the-foot dept

For many years, we've noted that while some in the legacy entertainment industry seem to think that there's a "battle" between "Hollywood" and "Silicon Valley" it's a very weird sort of war in which one of those parties -- Silicon Valley -- keeps supplying more and more "weapons" to the other party to help it adapt and succeed in a changing world. There are many examples of this, but the clearest is with the VCR, which the MPAA fought hard to outlaw in the 1970s and 1980s. The MPAA's Jack Valenti famously said in 1982 that "the VCR is to the American film producer and the American public as the Boston strangler is to the woman home alone." It was just four years later that home video revenue surpassed box office revenue for Hollywood. It wasn't the Boston strangler, it was the savior. Similar stories can be told elsewhere. The legacy entertainment industry has sued over MP3 players and YouTube, yet has now (finally) embraced online music and video years later than it should have.

And yet, that same legacy industry keeps trying to do everything to hamstring innovation that will only help it. A few years ago, we wrote about a fantastic post (sadly now gone from the internet) by Tyler Crowley, talking about the entrepreneur's view of innovation options and how many areas are welcoming for innovation -- which he described using the analogy of islands:

For tech folks, from the 35,000' view, there are islands of opportunity. There's Apple Island, Facebook Island, Microsoft Island, among many others and yes there's Music Biz Island. Now, we as tech folks have many friends who have sailed to Apple Island and we know that it's $99/year to doc your boat and if you build anything Apple Island will tax you at 30%. Many of our friends are partying their asses off on Apple Island while making millions (and in some recent cases billions) and that sure sounds like a nice place to build a business.

But what about Music Biz Island? Not so much:

Now, we also know of Music Biz Island which is where the natives start firing cannons as you approach, and if not stuck at sea, one must negotiate with the chiefs for 9 months before given permission to dock. Those who do go ashore are slowly eaten alive by the native cannibals. As a result, all the tugboats and lighthouses (investors, advisors) warn to stay far away from Music Biz Island, as nobody has ever gotten off alive. If that wasn't bad enough, while Apple and Facebook Island are built with sea walls to protect from the rising oceans, Music Biz Island is already 5 ft under and the educated locals are fleeing for Topspin Island.

As we pointed out, this leads to the legacy entertainment companies poisoning the well that contains the innovation water it desperately needs.

There's a parallel to this in terms of copyright laws. As the legacy entertainment industry keeps pushing for more draconian copyright laws, it only serves to scare more investors away. When we get good results, like the ruling in the Cablevision case saying that cloud-based services were legal, it resulted in a huge growth in investment in cloud services -- in contrast to much less spending in Europe, where the laws were a lot more ambiguous.

A new study from Fifth Era and Engine takes this finding even further, highlighting how bad or vague copyright laws are seriously scaring off investment in necessary platforms and innovation. A big part of this appears to be worries about absolutely insane statutory damages awards. The study surveyed tons of investors around the globe and they found an obvious concern about investing in areas where lawsuits could so easily destroy platforms:

In all eight countries surveyed, early stage investors view the risk of
uncertain and potentially large damages as of significant concern as they look to invest in [Digital Content Intermediaries]. 85% agree or
strongly agree that this is a major factor in making them uncomfortable about investing in [Digital Content Intermediaries].

And they're very specific about how the direct concern involves music and videos and the threat of a lawsuit that could simply put those companies out of business:

88% of worldwide investors surveyed said they are uncomfortable investing in [Digital Content Intermediaries] that offer user generated music
and video given an ambiguous regulatory framework.

This is really unfortunate on a number of different levels:

First, it limits the necessary innovation in services and business models that are likely to create the success stories of tomorrow. We need more experiments and platforms that allow places for artists and creators to create, promote, connect with fans and make money for their efforts. Yet if the legacy industry is scaring away all the investors, that's not going to happen.

Second, it locks in the few dominant players of today. Want to build the next YouTube? Good luck. You'll need lots of money to do so, but you're less likely to get it at this stage. The legacy players keep hating the big successful platforms, but don't realize that their own moves lock those players in the dominant positions.

Third, without competition in these spaces and platforms, content creators are less likely to get the best deals. When the legacy industry basically allows one player to become dominant, then it can set terms that are more in its favor. This is what so many from the legacy content industry are complaining about today -- without recognizing that their own actions regarding copyright law have helped create that situation.

Of course, many in those legacy industries actually see this sort of thing as a feature not a bug of pushing for greater copyright protectionism. They think -- ridiculously -- that by hamstringing innovation and investment they get to hold onto their perch longer. This is just wrong. It's trying to hold back the tide, while driving fans to alternative and often unauthorized platforms instead. Rather than supporting the innovation they need, pushing for bad copyright laws only helps to alienate the innovators the industry needs the most and the biggest fans whose support the content industry needs to thrive.

from the taking-my-ball-and-go-home dept

As part of its continued foray into film and more flexible release windows, Netflix this week announced it had acquired the Cary Fukunaga film "Beasts of No Nation." Based on the novel by Uzodinma Iweala, the movie stars Idris Elba and examines the impact of civil war on an unnamed West African country. Like the company's acquired sequel to "Crouching Tiger, Hidden Dragon," Netflix is using the opportunity to kick down the doors of antiquated release windows, pushing the film to theaters the same day it will be available on Netflix instant streaming.

Given this would challenge the aging structure of the film industry, you'll probably not be surprised to learn that the primary response to Netflix's move has been of the hissy fit variety. That home video viewing will kill theaters has been the refrain of theater owners for decades now.

So, when Netflix announced it would be offering its Crouching Tiger sequel in IMAX on the same day as streaming availability, AMC, Regal and Cinemark -- which, combined, run 247 of the 400 IMAX theaters in North America -- unsurprisingly announced they'd be boycotting the movie this summer. Similarly, those same chains have joined forces to boycott Netflix's release of "Beasts of No Nation," insisting they need to do so to protect the 90-day delay between a theatrical debut and a home entertainment release.

That inflexibility has opened the door to folks like Alamo Drafthouse CEO Tim League, who somehow grasps the immeasurably complicated idea that sometimes people like going out to the movies, and sometimes they like staying home. League shot down the idea that tinkering with release windows was a death knell for theater owners:

"I’m agnostic about this sort of thing,” said Tim League, the company’s CEO and founder. “I look at films I want to play and I play them regardless of the release strategy." League noted that Alamo Drafthouse had success showing “Snowpiercer,” even though that science-fiction adventure debuted last summer on-demand while it was still in theaters.

"I don’t look at myself as a competitor to Netflix,” said League. “I think that argument is a little bit of a red herring. I watch a lot of movies at home, but there comes a time where I want to get out of the house. I look at cinemas as one of those options that compete with restaurants or baseball games or all of those things I can’t do in my living room."

Flexibly focusing on the consumer instead of crossing your arms and making a pouty face when inevitable industry evolution occurs? Ridiculous! Somebody clearly forgot to inform League that change is always bad, and pouting like a petulant child is the only effective and profitable path forward when history and technology threaten to rattle the status quo.

from the this-taxpayer-money-is-burning-a-hole-in-my-common-sense dept

Fool me once, shame on me. Fool me annually and let me get my checkbook! Losses continue to mount, but some very resilient states are still willing to throw more taxpayer money at the film industry. Michigan -- a state that seems to be able to generate at least one fiscal horror story per year -- is one of the nation's most consistent losers. Two years ago, it bet the state pension fund on film-related subsidies… and lost. When the "investment" failed to generate a return, nearly $2 million was removed from the already-underfunded retirement pool. One small town pinned its hopes and dreams on a film project that promised 3,000 new jobs but instead fell apart, dragging the town towards insolvency.

Michigan has made some moves in the right direction after being burned so often by Hollywood and its fleeting, mercenary "interest" in its state. It paid out nearly $100 million in subsidies in 2011, but that number has dropped to $38 million for the coming year. Michigan House Minority leader Tim Greimel is pushing to bring that back up to $50 million, claiming that the program has been a great job creator -- an assertion that couldn't be farther from the truth.

The state has funnelled $500 million in public funds to its fledgling film industry since 2008, and has almost nothing to show for it. While some jobs were created—temporary production crews, mostly—those were offset by the losses to the sectors of the economy that had to finance the film subsidy (i.e. Economics 101).

In fact, over the past 15 years, job creation has remained almost flat. According to the Bureau of Labor statistics, there were 1,537 in-state jobs in the film industry in 2001. As of 2013, there were 1,564. And in that particular year, the subsidized industry didn't create a single job.

This boondoggle currently costs Michigan taxpayers $50 million a year and even the state’s own economic development agency (MEDC) reported this costly subsidy failed in 2013 to create one permanent job,” said Tricia Kinley, senior director of tax and regulatory reform at the chamber, in an press release.

A study released in 2012 showed that for every Michigan dollar spent on subsidies, the film industry only generated $0.11 of in-state revenue. And yet, politicians like Greimel are still insisting the best way to make money is to spend money -- year after year after year.

Since the program’s inception, nearly $433.5 million in film production tax credits have been approved/awarded to film production companies under the program. These companies, in turn, have directly injected close to $1.8 billion into PA’s economy; generated an estimated $3.2 billion in total economic activity; and supported an estimated 21,700 jobs (based on 2014 IMPLAN multipliers).

There are big problems with the Department's fuzzy math, as Rachel Martin at Watchdog.org points out. For one, it grabs unfinished and pending projects and mixes them in with completed projects to up the totals for both the number of jobs and the amount of money generated. Looking at the state's financial statements reveals something completely different.

[F]rom fiscal 2007 to 2013, only $55 million in credits were awarded and 2,700 jobs were created.

A more sobering assessment put together by the state's Independent Fiscal Office takes a lot of the irrational exuberance out of the Department's fluffed numbers. There's no "anything's possible" math to be found here. The report takes a very long and detailed look at the fiscal performance of the state's film subsidies and finds that -- much like other states -- handing out money to Hollywood doesn't make it rain locally.

In terms of budgetary return, a 2013 report by the state Independent Fiscal Office, “Uncapping the Film Production Tax Credit: a Fiscal and Economic Analysis,” found the state got a return of 14 cents on the dollar for tax credits, from state taxes generated by the program.

This pitiable return rate remains completely unchanged from the conclusions drawn by the Tax Foundation in 2010. Pennsylvania's film subsidies hand out dollar bills to film producers and then follow along behind them to catch any change that might fall out of their pockets. It's easy to sell subsidies to legislators, who are often more interested in the reflected glory of Hollywood projects than in safeguarding the funds they've been entrusted with.

The report also debunks the notion that film subsidies are job creators, much less wealth generators.

Wages constitute more than 60 percent of production expenses receiving credit under the FPTC, and the economic effects of the FPTC depend heavily on the amount of credit-eligible earnings that leave the state. Nonresidents spend only a small share of their earnings in the state while working on a production, thus limiting the impact on the state economy… According to data analyzed by the IFO, approximately 70 percent of production-related wages were paid to nonresidents.

The bottom line, according to the IFO?

The net, fully phased-in fiscal impact for the additional credits authorized in FY 2013-14 is estimated to be -$46.5 million at the lower end… and -$93.1 million at the higher end of the range.

Of course, if Pennsylvania decides to limit or dump its subsidies, it will soon discover that all the money it spent in the past has purchased nothing in the way of loyalty.

As an example of the mobility and fickleness of the industry, consider the show “Banshee.” It filmed its first three seasons in North Carolina, but packed up after that state eliminated its tax credit program and replaced it with a much smaller grant program.

The show will now film in Pittsburgh, which has a built-in irony, given that the show’s setting has always been the fictional Banshee, Pennsylvania.

Given the deficit the state is facing, you'd think legislators would be more than happy to drop the subsidy, if only to prevent the leakage of another $50-90 million. But the glamour of show business -- even if only admired from afar -- is tough to resist. It's easy to mistake the busy milling around of temp workers and nonresident stars for created jobs and positive economic impact. Throwing away 9/10ths of every dollar simply doesn't make sense, especially in a state already severely overdrawn. But nothing involving both Hollywood and accounting ever adds up.

Between 2004 and 2012, the California entertainment industry lost 16,137 film production jobs. During that same period the state of New York increased its entertainment employment by 25 percent. The Milken Institute attributes this shift in employment to the billions of dollars in robust incentives from competitive states like New York, New Mexico, Texas, and Louisiana.

If you can keep all of the money in one place, a state might turn a profit. But with productions scattered all over the US, California will just be another state throwing money at fickle, mostly uninterested productions. A short-term "bribe" never buys loyalty, especially not in the Land of 1,000 Backstabbings. The film industry is still very cutthroat and California's decades-long slide into legislative absurdity has made movie-making within its heavily-taxed confines very unattractive. (And then there's the labor stranglehold, but we'll let that go. For now...) The solution? More taxes! But this time mostly from the little people!

The legislation will increase the annual allocation of state tax credits to $330 million per year, more than triple the current amount, starting with fiscal year 2015-16 and lasting for five years. [...]The legislation also provides extra incentives — beyond the current 20% — for visual effects and music scoring, as well as to producers who shoot in parts of the state outside of the Los Angeles region.

The industry is -- and has been for years at this point -- pay-to-play. Unfortunately, it's the states' long-term residents who are paying the most, and reaping none of the benefits.

from the correlation dept

As you may have heard, last night was the Oscars -- Hollywood's favorite back-patting celebration. However, as a recent study found, films that were nominated for Oscars saw the number of unauthorized downloads and streams surge, as people wanted to make sure they had seen these celebrated films. Films like American Sniper and Selma saw a massive increase in unauthorized downloads after being nominated. The company that did this study, Irdeto, argues that these unauthorized downloads represent a major loss for the films' producers -- but it seems like there's another explanation: the MPAA really ought to be targeting the Oscars for encouraging infringement.

After all, for the past few years, the MPAA has been on a rampage trying to blame other third parties, like Google, which Hollywood insists is leading to greater infringement -- and yet, here's pretty obvious proof of another "cause" of piracy. Sure, one could argue (as we have, many times) that the lack of authorized, legitimate versions of these offerings may be contributing to the unauthorized downloads -- but the MPAA has insisted over and over again that this isn't fair. So, we'll take the MPAA at its word, and assume that the real culprit is "the Oscars" itself. Clearly, it's time to get rid of that major promoter of piracy. Just a few weeks ago, we noted that nearly all of the Oscar-nominated films were quickly finding their way online (in HD format, no less), and it's pretty clear that there would be a lot less demand if they weren't nominated.

Sure, one might argue, that the more popular a film is, and the more attention it gets, the more piracy will be the result -- but, again, the MPAA angrily dismisses such claims, insisting that it must be other factors leading to piracy. And, from the Irdeto study, it certainly appears that one major factor is... the Oscars.

I expect that the legal geniuses at the MPAA are now huddling in a circle figuring out which Attorney General they can convince to front a legal assault on the Oscars -- and this will all come out in the next batch of hacked emails....

from the why-do-they-even-bother? dept

Stan McCoy was, until recently, the lead negotiator on "intellectual property" for the US Trade Representative -- making him the main guy behind ACTA and the horrific intellectual property sections of the TPP and TTIP agreements. Then, last year, he jumped ship exactly where you'd expect him to go: becoming a lobbyist for the MPAA. McCoy, as we've noted, has a history of condescension and mocking towards anyone expressing concern for "the public," rather than "the industry" which pays his bills.

So, it should come as little surprise at all that, in his current role, he's out there trotting out more bogus claims that ignore reality, in order to push the agenda of his employer. In a blog post discussing his appearance on a panel in the UK, McCoy insists that he's busting the myth that there's piracy because the content isn't available from authorized sources:

We need to bust the myth that legal content is unavailable. Creative industries are tirelessly experimenting with new business models that deliver films, books, music, TV programs, newspapers, games and other creative works to consumers. In Europe, there are over 3,000 on-demand audio-visual services available to European citizens. According to a recent KPMG report, 86% of the most popular and highest quality films and television series are available across legal digital platforms to UK consumers.

Okay, so this is McCoy's attempt at mythbusting. And it fails, pretty miserably, as TorrentFreak's Ernesto showed with just a little bit of effort. He went and looked at the top 10 most downloaded films last week and busted McCoy's weak attempt at mythbusting:

Click through for TorrentFreak's clickable chart

And, of course the KPMG study that McCoy relies on is quite misleading as well, since it actually found that over 80% of the top movies are not available on Netflix, by far the most popular service. That means that if people actually wanted to see the movies they want, they face a fragmented, confusing market, in which they'd need to sign up for a bunch of different services with different limitations to actually see what they want.

In other words, despite the MPAA pretending otherwise again and again, it remains a simple fact that the lack of availability and convenience on authorized services has a difficult time competing with the availability and convenience of unauthorized offerings. The same thing has been true for well over a decade. The music industry has mostly figured this out, so why can't the movie industry?

Of course, what McCoy can't really say is the truth: the movie industry can't readily adapt because it will piss off the theaters. The recording industry couldn't more fully embrace the internet until the old record stores finally lost their power, and the studios are held back by the theaters nowadays. Of course, the MPAA could and probably should be trying to help transition to the future by pushing back against the theaters' outdated views and explaining to them how they can also easily compete with home viewing by providing a better in-theater experience. But that takes real work. Instead, the MPAA's focusing on "content protection" because that way it retains a reason to exist.